Capital Southwest Corporation (CSWCZ) delivered a solid EBITDA result in QQ1 2025, supported by strong fee-driven activity and cash generation. Reported revenue of $36.254 million and EBITDA of $45.012 million culminated in a net income of $14.035 million and earnings per share of $0.31. Cash flow from operating activities totaled $31.125 million, with free cash flow of $31.000 million, underscoring the company’s ability to convert earnings into cash and support distributions. However, the quarter also highlighted some sustainability concerns: net income declined year-over-year by 41.06% despite meaningful top-line growth (revenue up 19.74% YoY and 15.10% QoQ). The company paid dividends of $29.508 million while reporting a payout ratio of 210%, indicating the reliance on financing activities to fund distributions and the potential sensitivity of the dividend to earnings volatility.
The balance sheet remains substantial with total assets of approximately $1.544 billion and a debt load of about $738.6 million (net debt around $705.3 million). Cash and cash equivalents stood at $33.3 million at period end, and equity was about $777.3 million, yielding a leverage profile that supports ongoing investment activity but requires careful monitoring of liquidity and coverage in slower or more volatile markets. Absence of an earnings call transcript in the provided data limits qualitative insights from management commentary; the quantitative results suggest a business with strong EBITDA generation but with significant emphasis needed on dividend sustainability and net income drivers going forward.